Ep. 73 – 5 Biggest Algo Trading Mistakes with Edwin Cornelissen of Trade View
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In this episode:
Edwin Cornelissen (Eddie to his mates!) of Trade View talks about building algos
There are 5 common mistakes that algo traders make – he outlines them here
Learn how to smooth drawdown and increase profits with a portfolio of algos applied to the same account size
Tom makes money applying regular trading ideas to Bitcoin
Trader Interview – 5 Biggest Algo Trading Mistakes with Edwin Cornelissen of Trade View
Eddie is a Systems Trader with Trade View. Trade View are at heart a prop trading firm and Eddie is closely involved in building and trading a portfolio of algorithms within the fund.
Eddie’s other role is as the friendly face of EA Lab! EA Lab is Trade View’s algorithm building software that allows traders to virtually any trading strategy using a drag and drop logic functionality that requires zero coding.
Knowing that the EA Lab software was built by real traders is part of what makes it so attractive.
A big element of what Eddie tries to achieve is convincing new clients to build algorithms based on models that have a high probability of success. He speaks to all different types of new and experienced traders. He sees a number of mistakes that are made, time and again, that hamper the ability of these traders to succeed.
The 5 Biggest Algo Trading Mistakes that Eddie Sees:
1. Wanting to use a particular indicator or starting a strategy idea based on the indicator, rather than sound market principles.
2. Having something in mind that you want to trade (strategy, product, indicator), often with no valid reason.
3. Being adamant something will work, even when their testing has proven that it has never worked in the past
4. Not checking if their strategy is better suited to a different product or group of products
5. Failing to build a an algo portfolio.
This last point is my favourite. I think most manual traders will accept the need to have more than one trading strategy. For some reason algo traders sometimes seem to believe that they can put all of their money in one algo on mone product and leave it.
Often individually, the results of an algo are consistent, but not impressive. As a portfolio, whether with more products or more strategies your results will be even more consistent and even more impressive.
If you have 1 algo that has 1% max drawdown and 10% gains, then when you overlay 10 algos on the same account you have a double benefit. Firstly you are unlikely to much increase the drawdown (the 1 percents won’t all happen at the same time) but equally the 10% gains are cumulative. You don’t even need more money – you can run the algos on the same account as long as you stay well within margin parameters.
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